Critics challenge costs of PNM plan to shutter part of coal-fired power plan

The state's largest electric utility is underestimating the costs that will be passed on to customers under a proposal to shut down part of an aging coal-fired power plant in northwestern New Mexico, according to a regulatory filing made Friday by renewable energy advocates.

The Santa Fe-based group New Energy Economy is accusing PNM of withholding from the Public Regulation Commission key information about the plan's price tag.

The group contends PNM didn't include more than a half-billion dollars of ongoing capital expenditures in the calculations and failed to weigh the costs of environmental regulations and the disposal of coal ash waste generated by the power plant.

"It's about shifting these risks, whether it's the environmental risks or decommissioning costs, from the shareholders to the ratepayers," said Mariel Nanasi, executive director of New Energy Economy. "That's really what this is all about. That's why this is not just a climate issue. It's an economic issue."

New Energy Economy argues PNM's plan to replace power lost by the shutdown relies too heavily on coal and natural gas, and not enough on alternative energies.

PNM says it stands behind the science used to craft its plan, which is at the center of what many consider as a watershed public utility case that will set the stage for energy policy in New Mexico for decades to come.

PNM is seeking approval for a plan to retire two units at the San Juan Generating Station near Farmington and replace the power with a mix of more coal from one of the plant's other units, electricity generated by the Palo Verde nuclear plant in Arizona, a new natural gas-fired plant and solar.

PNM's regulatory filings estimate the cost over 20 years at more than $6.8 billion. The utility says its plan represents the most cost-effective alternative for dealing with federal environmental mandates that call for reducing haze-causing pollution at San Juan.

Utility spokeswoman Susan Sponar said the plan also puts New Mexico on the path for compliance with proposed greenhouse gas emissions regulations.

New Energy Economy, the New Mexico Attorney General's Office and others have asked state regulators to appoint an independent monitor to review PNM's proposal to ensure the utility is choosing the most cost-effective new power sources to replace the capacity that will be lost when two units are closed at San Juan in 2017.

New Energy Economy argues that PNM's plan was predetermined and that utility executives didn't weigh other alternatives that included buying power on the open market or less expensive renewable sources such as wind.

The utility has been forthcoming with investors about the potential costs of complying with proposed environmental regulations that deal with coal ash and emissions, but the group contends similar considerations are not part of the testimony provided to state regulators.

"The PRC is supposed to be protecting the public and consumers but they can't make a decision if material facts have been omitted," Nanasi said.

State regulators have scheduled a hearing in October to consider PNM's proposal.